糖心TV

"Memory, Attention and Choice"

Abstract: We present a theory of consumer choice that combines elements of limited recall and of allocation of attention distorted by salience. The theory helps clarify and organize a variety of evidence dealing with consumer reaction to information, including surprises in quality and prices, unshrouding of hidden attributes such as taxes or maintenance costs, and reminders.

A common feature of the empirical evidence, which our model sheds light on but standard models do not explain, is that consumers under or overreact to information, depending on what draws their attention. We also present a normative analysis of reaction to reminders which adjusts the more standard ``sufficient statistic'' methodology.